| Indicator | This Period | Prior Year | YoY |
|---|---|---|---|
| Revenue / Net Sales | ¥244.8B | ¥235.1B | +4.1% |
| Operating Income / Operating Profit | ¥52.4B | ¥45.2B | +16.1% |
| Ordinary Income | ¥54.6B | ¥44.7B | +22.1% |
| Net Income / Net Profit | ¥37.0B | ¥30.3B | +22.1% |
| ROE | 15.5% | 14.1% | - |
The fiscal year ended May 2026 reported Revenue ¥244.8B (YoY +¥9.7B +4.1%), Operating Income ¥52.4B (YoY +¥7.3B +16.1%), Ordinary Income ¥54.6B (YoY +¥9.9B +22.1%), and Net Income ¥37.0B (YoY +¥6.7B +22.1%). The company achieved revenue and profit growth; Operating Margin improved to 21.4% (prior year 19.2%) up 2.2pt, and Net Margin improved to 15.1% (prior year 12.9%) up 2.2pt. Gross profit margin improved to 47.3% (prior year 46.3%) up 1.0pt, driven by a better product mix in the Weather Data & Solutions business, while SG&A was almost flat at ¥63.4B (prior year ¥63.6B), allowing operating leverage to take effect. Non-operating income was limited at ¥2.2B, underscoring an operating-led profit increase.
【Revenue】Revenue was ¥244.8B, up 4.1% YoY. As a single-segment company (comprehensive content provision services centered on weather information), detailed breakdowns are not disclosed, but Gross Profit increased to ¥115.9B (prior year ¥108.7B), up 6.6%, and Gross Margin improved to 47.3% (prior year 46.3%) up 1.0pt. The shift to higher value-added services and price revisions likely drove the margin improvement. Contract assets declined to ¥10.6B from ¥11.7B a year earlier, while contract liabilities were almost flat at ¥6.8B (prior year ¥6.7B), indicating stable revenue recognition on a prepayment basis.
【Profitability】Operating Income was ¥52.4B, up 16.1% YoY. SG&A was slightly down at ¥63.4B (prior year ¥63.6B), with SG&A-to-revenue improving to 25.9% (prior year 27.1%) up 1.2pt. Containing SG&A against higher gross profit produced operating leverage, lifting Operating Margin to 21.4% (prior year 19.2%) up 2.2pt. Non-operating income totaled ¥2.2B (interest income ¥0.2B, gain on sale of securities ¥0.9B, subsidies ¥0.3B, etc.), and non-operating expenses were ¥0.1B (including foreign exchange losses of ¥0.9B), resulting in a net positive contribution of ¥2.1B. Ordinary Income was ¥54.6B (prior year ¥44.7B), up 22.1%. Extraordinary losses were minor at impairment losses of ¥0.1B. Profit before tax was ¥54.4B, income taxes were ¥16.3B (effective tax rate 30.0%), yielding Net Income ¥37.0B (prior year ¥30.3B), up 22.1%, achieving revenue and profit growth.
【Profitability】Operating Margin of 21.4% (prior year 19.2%) improved 2.2pt due to SG&A containment and gross margin improvement. Net Margin of 15.1% (prior year 12.9%) improved 2.2pt, indicating continued operating-led profit growth. ROE 15.5% improved 1.1pt from 14.4% a year earlier, reflecting more efficient use of equity. 【Cash Quality】Operating Cash Flow (OCF) ¥36.4B is 98.4% of Net Income ¥37.0B, a high level; however, the ratio of actual OCF to OCF subtotal is 70.3%, indicating working capital remains a drag. Increases in trade receivables of -¥4.6B and corporate tax payments of -¥16.0B were the main cash outflows. Free Cash Flow (FCF) secured ¥35.0B, with Capital Expenditure ¥1.8B and Depreciation ¥4.9B, yielding a CapEx/Depreciation ratio of 0.37x, indicating restrained renewal investment. 【Investment Efficiency】Total Asset Turnover was 0.87x (Revenue ¥244.8B ÷ Total Assets ¥282.6B), somewhat low. Tangible fixed assets ¥15.9B and Intangible fixed assets ¥1.4B are light, leaving room to improve asset efficiency. 【Financial Soundness】Equity Ratio 84.6% (prior year 83.5%) and Current Ratio 640% (prior year 627%) are extremely strong. Cash and deposits ¥188.4B account for 66.7% of total assets, providing ample liquidity. Interest-bearing debt is zero, giving an effective D/E ratio of 0.0x and a conservative capital structure.
OCF was ¥36.4B (prior year ¥44.3B), down 17.8% YoY, but the cash conversion ratio to Net Income was healthy at 98.4%. The decline was mainly due to a widening gap from the OCF subtotal ¥51.8B (prior year ¥54.7B) to changes in working capital and tax payments. An increase in trade receivables of -¥4.6B (prior year +¥0.8B inflow) and corporate tax payments of -¥16.0B (prior year -¥10.8B) pressured cash outflows. Investing Cash Flow was -¥1.4B, with Capital Expenditure -¥1.8B and intangible asset acquisitions -¥0.3B, limited to minimal renewal investment and partially offset by recoveries such as lease deposits. Financing Cash Flow was -¥17.7B, primarily dividend payments of -¥17.7B; share buybacks were -¥0.0B, effectively nil. FCF (OCF + Investing CF) secured ¥35.0B, sufficient to cover dividends of ¥17.7B. With Depreciation ¥4.9B versus CapEx ¥1.8B, the CapEx/Depreciation ratio was 0.37x, low and indicative of asset aging risk and room for growth investment. Cash and deposits increased from ¥169.7B at the beginning of the period to ¥188.4B at the end, up ¥18.6B, further strengthening liquidity.
Earnings quality is high. Non-operating income was limited at ¥2.2B (4.2% of Operating Income), indicating primary earnings are concentrated in core operations. Non-operating income included somewhat one-off/non-recurring items such as interest income ¥0.2B, gain on sale of securities ¥0.9B, and subsidies ¥0.3B, but the scale is small. Non-operating expenses were minor at ¥0.1B, although foreign exchange losses of ¥0.9B were recorded, the substantive impact is limited. Extraordinary items were only impairment losses of ¥0.1B, showing small divergence from ordinary results. Comprehensive income was ¥39.6B, ¥2.6B above Net Income ¥37.0B, with Other Comprehensive Income ¥1.5B (Foreign currency translation adjustments ¥1.4B, valuation differences on available-for-sale securities ¥0.1B) added, though these are valuation differences with limited conversion to realized cash. OCF ¥36.4B closely matched Net Income ¥37.0B, indicating small accrual/Cash divergence and good cash backing of earnings. However, working capital movements caused a cash outflow of ¥15.4B from the OCF subtotal ¥51.8B, with increases in trade receivables and tax payments pressuring cash — this warrants monitoring.
Full-year guidance projects Revenue ¥258.0B (YoY +5.4%), Operating Income ¥54.0B (YoY +3.0%), Ordinary Income ¥55.0B (YoY +0.8%), and Net Income ¥38.5B. Progress against the current results is Revenue 94.9%, Operating Income 97.0%, Ordinary Income 99.3%, generally on track. Progress at the ordinary-income level is high, leaving limited upside toward year-end, while there is modest room for improvement at the operating-income level. The dividend forecast is an annual ¥50 (¥25 final), and while interim stock splits and a commemorative dividend raise the headline payout ratio during the period, on a split-adjusted regular dividend basis the payout ratio is expected to be around 50%, a healthy level.
Dividends paid were Interim ¥45 and Final ¥62.5, totaling ¥107.5. However, 1:2 stock splits were conducted in December 2024 and March 2026, and the split-adjusted effective annual dividend is ¥70 (same level as prior year ¥70). A commemorative dividend of ¥40 was added at year-end, so the headline payout ratio appears high at ¥107.5/¥85.76=125.4%, but excluding the commemorative dividend the regular dividend basis is ¥67.5/¥85.76=78.7%. Total dividend payments were ¥17.7B (cash flow statement basis), representing a payout ratio of 47.8% relative to Net Income ¥37.0B, and a dividend coverage of 2.0x relative to FCF ¥35.0B, both healthy. Share buybacks were -¥0.0B, effectively not executed, so returns are dividend-focused. Full-year dividend guidance is ¥50 (post-split), implying a forecast payout ratio of 58.3% against forecast EPS ¥85.78. The dividend policy emphasizes stable dividends while using commemorative dividends to enhance returns.
Working Capital Management Risk: An increase in trade receivables of -¥4.6B caused a cash outflow of ¥15.4B from the OCF subtotal ¥51.8B to the actual amount ¥36.4B. While receivable increases are natural with revenue growth, if collection periods lengthen or contract terms relax, cash conversion efficiency could decline. Days Sales Outstanding is approximately 57 days (¥38.3B ÷ ¥244.8B × 365 days), currently acceptable, but the pace of future increases should be monitored.
Growth Slowdown Risk from Investment Restraint: CapEx ¥1.8B / Depreciation ¥4.9B = 0.37x, with renewal investment well below depreciation, and Intangible fixed assets declining to ¥1.4B (prior year ¥2.3B), a 39.7% drop. In the short term this boosts FCF and margins, but medium-to-long term it risks losing competitiveness and slowing growth due to delayed technology refresh and service development. With abundant cash ¥188.4B, the capacity to invest exists; accelerating selective reinvestment in growth areas is an issue to address.
Future Cash Outflow Risk for Asset Retirement Obligations: Asset retirement obligations are ¥4.1B (prior year ¥5.1B), accounting for about 80% of total fixed liabilities ¥5.1B. These are future expenditures associated with restoration obligations for data centers, office facilities, etc., and can cause temporary cash outflow pressure at contract expirations. Although they decreased by -¥1.0B this period, future burdens may fluctuate with contract revisions and removal estimates, requiring management aligned with facility strategy.
Profitability & Returns
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Operating Margin | 21.4% | 8.1% (3.6%–16.0%) | +13.3pt |
| Net Margin | 15.1% | 5.8% (1.2%–11.6%) | +9.3pt |
Profitability is markedly high within the industry, with both Operating and Net Margins substantially above the median and in the top tier.
Growth & Capital Efficiency
| Metric | Company | Median (IQR) | Delta |
|---|---|---|---|
| Revenue Growth (YoY) | 4.1% | 10.1% (1.7%–20.2%) | -6.0pt |
Revenue growth is below the industry median, indicating a relatively modest growth pace. While high profitability is maintained, there is room to accelerate top-line expansion.
※ Source: Company compilation
Sustained high profitability and financial strength: Operating Margin 21.4% and Net Margin 15.1% place the company among the top in the industry; SG&A containment and gross margin improvement have enabled operating leverage. Equity Ratio 84.6% and cash ratio 66.7% indicate extremely high financial resilience, with a defensive earnings structure providing a stable base for dividends. ROE 15.5% shows efficient use of equity; maintaining margins and improving capital efficiency going forward could further enhance shareholder value.
Room to re-accelerate growth investment: Revenue growth +4.1% trails the industry median +10.1%; CapEx/Depreciation 0.37x and reduction in intangible assets show material investment restraint. Leveraging ample cash ¥188.4B to selectively resume investment in technology development, M&A, and strengthening sales capabilities could lift medium-term top-line growth. Optimizing investment pace is a key driver for next-period growth.
Need to improve working capital management: Actual OCF ¥36.4B versus OCF subtotal ¥51.8B (cash conversion ratio 70.3%) resulted in ¥15.4B cash outflow due to increased trade receivables and tax payments. Optimizing contract terms and shortening receivable cycles could improve cash conversion efficiency. While FCF ¥35.0B sufficiently covers dividends and investments, improving working capital efficiency could further expand shareholder return capacity.
This report is an AI-generated earnings analysis document automatically produced from XBRL financial statement data. It does not constitute a recommendation to invest in any specific securities. Industry benchmarks are reference information compiled by the firm based on public financial statements. Investment decisions are your own responsibility; consult experts as appropriate before making investment decisions.